Working Paper: NBER ID: w0538
Authors: Ray C. Fair
Abstract: On October 6. 1979, the Federal Reserve announced what most people interpreted as a change in monetary policy. The purpose of this paper is to estimate the effects of this change on the 1980-81 economy. The effects of the change are estimated from simulations with my model of the U.S. economy (1976, 1980b).
Keywords: Monetary Policy; Economic Growth; Inflation
JEL Codes: E52; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| October 1979 monetary policy change (E65) | reduction in real growth (F62) |
| October 1979 monetary policy change (E65) | increase in bill rate (E43) |
| increase in bill rate (E43) | negative effect on demand (D12) |
| increase in bill rate (E43) | negative effect on output (E23) |
| negative effect on demand (D12) | cumulative loss of approximately 400,000 jobs (F66) |
| negative effect on output (E23) | reduction in real GNP (E20) |
| October 1979 monetary policy change (E65) | minimal impact on inflation (E31) |